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Companies should evaluate governments’ investment attraction and production relocation policies as part of any supply chain diversification within Asia. Capitalizing on these incentives should be done in a way that balances enhancing supply chain resiliency with the added cost and reduced efficiency that diversification may entail. It’s in this way that supply chains are becoming more intricately tied to overall strategies. For many companies, maintaining the ability to serve the Chinese domestic market will be crucial. The “China Plus” model – where producers expand to other markets while retaining their footprint in China – may be an effective strategy for many companies to pursue.
3. Target the Asian consumer
Escalating geopolitical tensions are affecting the Asian business environment, with US-China tensions particularly impactful for companies around the world. Yet this creates a silver lining for companies operating in Asia: policymakers are deepening regional trade ties, which will result in larger, more integrated consumer markets. Most notably, there’s a renewed focus on finalizing the Regional Comprehensive Economic Partnership (RCEP) – a bloc of 15 Asian countries that comprise approximately 30% of global trade. And Asian governments are using direct cash payments and other stimulus measures to support consumer spending during the COVID-19 crisis.